GREEN SHIPS AND GREEN GROWTH

ASSESSMENT OF SELECTED POLICIES

PROMOTING THE CONSTRUCTION AND
OPERATION OF GREENER VESSELS
Session 2, Workshop on Green Growth of the Maritime Industries
Paris, 20 November 2017

Contact: Structural Policy Division,

Mr. Laurent DANIEL, LaurentC.DANIEL@oecd.org
Mr. Kei ITO, Kei.ITO@oecd.org
 Agenda

• Green house gases (GHG)

• Air pollutants (SOx, NOx)
• Innovation
 Policies and measures promoting the
construction and operation of green ships
Targets Level of Authorities Form of policy Start year
implementation responsible
GHG International IMO Regulation 2013
National Japan R&D support for maritime sector 2008
Air pollution International IMO Regulation 2005
Regional IMO Regulation 2006
National Finland Grant for shipowners 2010
National Norway Policy mix of fee and funding 2007
National Singapore Port fee discount and tax deduction 2011
Biodiversity International IMO Regulation 2017
National US Regulation 2014
Cross-cutting Regional EIB Loan guarantees to shipowners 2016
National Denmark R&D support for maritime sector 2015
National Finland R&D support for shipbuilding 2008
National Norway Regulation in ferry tenders 2016
National Turkey Subsidies for scrapping 2015
National Norway Subsidies for scrapping and building 2016
National China Subsidies for scrapping and building 2009
National Romania Policy mix 2018
 Contents

• Green house gases (GHG)

• Air pollutants (Sox, NOx)
• Innovations
 CO2 emissions from ships

• International maritime shipping currently

accounts for about 800 million tonnes of
carbon dioxide equivalent (CO2e)
emissions per year
• A figure that could almost double by 2060
under current energy and climate
commitments made by the International
Maritime Organization.
Source : IEA
 Green house gases (GHG)

• Paris Agreement (December 2015)

– International shipping is not included
• Kyoto Protocol
– “Parties in Annex I should work through the
International Maritime Organisation (IMO) on
the limitation or reduction of GHGs emissions
from ships”
• International Maritime Organisation (IMO)
– Mandatory energy-efficiency regulation based on
the Energy Efficiency Design Index (EEDI)
 Energy Efficiency Design Index (EEDI)

• Minimum energy efficiency level for

different ship types
Simplified formula

(75%  Pb  PAE )  sfc  C f

EEDI att 
f v  DWT  Vref
CO2 emissions with and without EEDI,
million CO2-ton
Estimation of EEDI values of individual
vessels
(a) Bulker (b) Tanker
 Evolution of ship design affecting EEDI,
bulk carriers
Speed of vessels by fleet size category, knots SFC of vessels by fleet size category

Admiralty coefficient of vessels by fleet size category L.W. / LBD of vessels by fleet size category, ton per m3
 Summary of EEDI assessment

• EEDI : significant impact on shipping

emissions
– It contributes to a reduction by 115 million CO2 ton
by 2035, or 38% of emission from bulkers, tankers,
containers in 2015.
• EEDI leads to improve vessel design rather
than to reduce design speed.
• EEDI more effective to restrict low energy
efficient vessels rather than promote energy
efficient ones
– Encouraging over compliant vessels in terms of fuel
efficiency necessary in order to seek further
reduction in CO2 emissions from shipping
 Contents

• Green house gases (GHG)

• Air pollutants (SOx, NOx)
• Innovations
 IMO regulation on SOx and NOx

MARPOL Annex VI fuel sulfur limits MARPOL Annex VI NOx emission limits

Source; Diesel net

MARPOL Annex VI: Emission Control Areas

Emissions In effect from
Baltic Sea SOx 19 May 2006
North Sea SOx 22 November 2007
North American SOx, NOx 1 August 2012
United States Caribbean Sea ECA SOx, NOx 1 January 2014
Source; http://www.imo.org/en/OurWork/Environment/SpecialAreasUnderMARPOL/Pages/Default.aspx
 Shares of MGO or LNG capable
vessels are increasing notably in SECA

Share of number of new built vessels by fuel type, % in total counts

(a) All vessels (b) SECA flagged vessels

Source; OECD calculation based on Clarkson World Fleet Register

*MGO is Marine Gas Oil with Low-sulphur (<0.1%) contents

 Growth rate in ship number of LNG
capable vessels is high in SECA
Growth rate of share of MGO/LNG capable vessels in fleet number, %
(a) MGO capable vessels (b) LNG capable vessels

Source; OECD calculation based on Clarkson World Fleet Register

 LNG fueled LNG carriers in non-SECA
LNG fueled non-LNG carriers in SECA
Fleet number of LNG-fueled vessels by vessel type, #
(a) Non-SECA flagged fleet number (b) SECA flagged fleet number

Source; OECD calculation based on Clarkson World Fleet Register

Scrubber equipped vessels are increasing in SECA, but
growing similarly regardless of SECA/non-SECA

Scrubber equipped vessels share in total fleet, %

(a) Owner countries (b) Flag countries
 National policies in response to the
regulation on emission of air pollutants

• Finland; the Investment aid scheme for purchasing greener ships or

retrofitting green equipment.
• Norway; the NOx tax was introduced in 2007 to address NOx emissions from
industry sectors. A substantial part (60 per cent) of the funding in the maritime
sector was linked to LNG powered vessels.

Measures Target Start/End year Budget

pollutant
Finland Investment aid SOx 2010/2014 EUR 44 million per
year
Norway NOx tax and NOx 2007/On-going NOK 700 million
NOx fund per year
 Different reactions by countries to tighter
restrictions on air pollutants emission
Share of scrubber retrofitting, LNG capable vessels and denitrification system equipped vessels

sulphur scrubber retrofitting LNG capable vessels Denitrification system equipped

(a) Owner countries (a) Owner countries (a) Owner countries

(b) Flag countries (b) Flag countries (b) Flag countries

 Summary of the assessment of stricter
restriction on air pollutants in ECAs

• Stricter restriction on sulphur content in

ECAs has an impact on developments of
LNG capable vessels.
• National policies and measures appeared
to significantly affect the owners’ decisions
on how they comply with regulations.
 Contents

• Green house gases (GHG)

• Air pollutants (Sox, NOx)
• Innovation
 Significant increase in ship sector
patent applications
Patent application counts in ship sector by country

(a) Patent application counts by selected country, # (b) Patent application per SB capacity, # per cgt

Source: OECD calculation based on IHS Seaweb and OECD Stat

 Patent activities are more intense for technologies which
are less likely to be introduced into the market

• Increase in patent activities (Propeller < Air lubrication ≈ Wind power)

*Marginal CO2 abatement costs (Propeller < Air lubrication < Wind power)

Indexed patent trends (2000 = 100) for ship technologies related to climate change

Source: OECD Stat

 Patent activities are more intense for technologies which
are less likely to be introduced into the market

• Increase in patent activities (Propeller < Air lubrication ≈ Wind power)

*Marginal CO2 abatement costs (Propeller < Air lubrication < Wind power)

Source: International Council on Clean Transportation (ICCT), 2011

 Case study on R&D support for green
innovation in Japan
• R&D support for ship sector since 2009 in a form of grant, aiming to develop
technologies which contribute reduction of CO2 emissions from shipping

Volume of R&D support, in million JPY

2010 2011 2012 2013 2014 2015
Million JPY 783.17 684.87 428.31 333.19 354.61 301.19

Indexed patent trends (1990 = 100) for various ship and waterborne technologies
Increase in patent applications in Japan since 2008 is
driven by energy efficient hull design (i.e. air lubrication)
and innovation in traditional propulsion system

PCT counts for hull design and propulsion system, #, Japan

 Summary of analysis on patent activity
in ship sector

• Patent activities are more intense for

technologies which are less likely to be
introduced into the market, but type of
invented technology may depend on
country and its policy.
 Concluding remarks

• International regulation has an impact on

– the environmental performance of ships
– patent activities in the ship sector
– business opportunities for shipbuilding and
repair industries
• Regional and national measures impact
stakeholders’ decisions on how they
– comply with regulations
– undertake patent activities
 Thank you.

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